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The exclusive Swedish
banking club continues to shower gold to its top executives. The
Finance Minister can only talk and watch but can’t do anything
Thursday, 08 March 2012
The major
Swedish banks made a record combined profits in 2011 on customer
mortgages mostly. Criticism on their pricing model has been fierce,
especially from the Swedish Finance Minister, Anders Borg. But that is
where it ends because now, bank management will be basking in millions
as gold rain on them in the form of wages, high variable compensation -
and the possibility of an early, substantial pension.
To start with,
Nordea CEO Christian Clausen tops the four banks in terms of salary
according to the banks' annual reports when a comparison is made with
the other big banks. Nordea CEO's base salary stood at around
Skr10.8 million for 2011. In addition, he had Skr4.2 million in
variable compensation for his efforts last year.
Günther Marder,
president of Shareholders Association, expects to attend all the bank’s
meetings later this spring. He notes that it is important for the
voices on the distribution of bank managers' fixed payments and the
pension plan be established.
There is a
tendency now that increasingly, huge pays are now being passed to
pension component that are much more difficult to penetrate according
to him.
What also stand
out this year are new, higher levels of compensation to the board
members and chair persons. Not least Handelsbanken has raises in an
inexplicable way their levels of that compensation. “A bank that sees
itself as safe and stable do not need a risk premium element,” he notes.
All four major
banks' CEOs are according to their respective contracts with their
employers expected to retire at the age of 60. The commitment by the
banks is that they annually set aside millions of Krona in retirement
funds.
In Christian
Clausen's case, it is about 1.5 million euros (Skr13.5 million) in
pension contributions for 2011. It is twice as much as the bank made
provision for 2010.
The difference
is explained in Nordea's Annual Report and the new pension plan in
which the variable component of CEO compensation is no longer counted
in the pension amount. On 1 January 2011 the possible maximum
retirement income was also increased from 190 to 200 base (a base
amount is in the region of Skr44 000).
Christian
Clausen's pension arrangements can roughly give him about Skr100
million in pensions. Even Handelsbanken's CEO Pär Boman and SEB's
Annika Falkengren have a silver lining on the pension agreement. Only
Handelsbanken's pension obligations to its president that would be,
according to the annual report just over Skr 132 million.
SEB was
yesterday the last of the four major banks to submit annual report to
shareholders and the Spring Meetings arrangement. According to its CEO
Annika Falkengren her salary will have to increase to Skr7 million. Her
variable compensation in 2011 was just over Skr5 million.
Swedbank CEO
Michael Wolf, who took over as CEO in 2009, has no variable
compensation in the form of bonuses, individual or general compensation
program. Wolf drew in last year Skr 8 million plus a benefit allowance
of Skr157 000.
Bank executive
are paid all these various allowances in the wake of massive criticism
from customers and politicians. This money has been gained from
particularly the bank’s high interest rate margins and the profits that
the banks have made from, especially on mortgages.
Overall, the
four major banks' net interest income, the difference between deposit
and lending interest rates was a record Skr109 billion.
By Scancomark.se Team
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